Struggling to go modern
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Struggling to go modern

Author: Mark Mulligan Chile’s parliament is close to passing a law that started life as a proposal to protect minority shareholders but now covers everything from stock options and share buy-backs to control of the country’s banking sector.

After three years of draft and debate, the so-called OPA law (from the Spanish for public share offer), cleared the upper house of congress on July 18, though it now needs a second approval from the lower chamber because of amendments.

Although the bill is multifaceted, its main thrust is to give minority shareholders the right to the same premium as controlling investors in the case of a takeover or merger. It is an obvious reform that brings Chile into line with the rest of the modern world, but it has upset the powerful families that dominate business life.

To ensure the legislation’s passage through parliament, proponents had to concede ground to right-wing supporters of the families by including an amendment allowing majority shareholders a three-year period to tender their equity to a suitor without involving the minorities.

Parliamentarians concede that the legislation could still become bogged down on this and several other points, but the investment community has already welcomed it as step in the right direction.

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